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Two officials dissented in favor of 25 basis point rate cut at Jan. meeting (Waller and Miran)
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Almost all participants supported maintaining rates at 3.5%-3.75%
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Several participants open to ‘two-sided’ guidance including possible rate hikes
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Vast majority judged downside risks to employment had diminished
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Most officials saw risk of inflation stalling above 2% target
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Staff economic outlook was stronger than in Dec. forecast
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Officials saw core goods prices boosted by tariff increases
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Some participants argued for holding rates steady for some time
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Staff projected inflation to remain slightly higher than previous forecast
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Many officials anticipated slower or more uneven progress toward inflation goal
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Participants generally noted consumer spending supported by wealth gains
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Staff expected real GDP growth to outpace potential growth through 2028
If you were hoping for any dovish breadcrumbs from these minutes,
you’re going to be disappointed.
The market is waiting for the new Fed chair to shake things up and for economic data. What’s notable here is that the staff projection for economic activity was stronger than the December forecast, driven by incoming data and financial conditions. The staff’s inflation forecast was revised slightly higher, reflecting expectations of tighter resource utilization and higher core import prices.
The other notable development in these minutes is the explicit mention of rate hikes as a possible policy direction.
Most participants cautioned that the path back to 2% inflation could be
“slower and more uneven” than expected and flagged the risk of
persistently above-target inflation as “meaningful.” Some cited business
contacts who planned to raise prices this year due to cost pressures
including tariffs
